The segmentation of consumer markets requires the creation of sub-groups from a larger population to more specifically target them. There are virtually dozens of ways that a market might be segmented and the segments chosen will depend on the business and the products or services it offers. Basically, segmentation is all about identifying specific groups of people based on common characteristics.

Demographics

One common way of segmenting a market is through the use of demographics. Demographics are quantitative characteristics of a group of people. These characteristics might include sex, age, income or geography (where they live). Businesses that segment their market based on demographics are attempting to target specific market segments that are more likely to be interested in what they have to offer. The cosmetics industry, for example, primarily targets women. The hunting industry might be more likely to target men. Luxury car makers target their markets based on income. Marketers are likely to consider multiple demographic characteristics when segmenting their consumer markets.

Psychographics

Psychographics are qualitative attributes of a market and refer to the way people think and what they like to do. Psychographics is sometimes categorized with the acronym IAO which stands for Interests, Activities and Opinions. It can be difficult for marketers to segment their markets into these types of categories on their own. Nielsen is one organization that offers access to consumer lists based on their specific classifications. They have divided U.S. households into 66 distinct types or segments to help marketers focus on market segments based on psychographic characteristics. Psychographics are personal attributes related to personality, values, attitudes, interests, or lifestyles.

Purchase Behaviors

An important way for businesses to segment their consumer markets is through purchase behavior. Keeping good records of customers and their purchases, allows marketers to identify those who have purchased certain types of products or spent at certain levels and to then target them with similar offers. Marketers are also able to target customers of other businesses through by renting lists, which can be used in direct marketing efforts through traditional mail or, increasingly, online.

Pulling It Together

The more segments that marketers are able to identify and combine to specifically target groups of individuals most likely to be interested in what they have to offer, the more effective--and cost effective--their marketing efforts can be. Toward this end, businesses attempt to learn as much as they can about their customers--where they live, their age, their income levels, what they purchase, what their hobbies are and what their likes and dislikes are. This information can then be used to "clone" these customers by reaching out to non-customers who share similar traits and characteristics.

About the Author

Leigh Richards has been a writer since 1980. Her work has been published in "Entrepreneur," "Complete Woman" and "Toastmaster," among many other trade and professional publications. She has a Bachelor of Arts in psychology from the University of Wisconsin and a Master of Arts in organizational management from the University of Phoenix.